Capital Gain or Sale?

Don't know if I am being blonde or not!!!!

I have got a client who has an internet trading business with various domain names. Last year they sold one of the names.

Is this is a capital gain or just a sale?

Many thanks.



  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    This doesn't seem as straight forward as normal.

    However my thoughts would be:-

    When they bought the domain name it may well have just cots around £10. In which case I doubt it would have been capitalised? If this was the case I may well be inclined to just put it as a sale.

    Hope this helps

  • claudialowe
    claudialowe Registered Posts: 275
    Hi Burg

    Thanks for your reply - I agree that it is not simple - hence the question. Client is still trading (albeit at a very low level), and has b/f trading losses that can be utilised.

    Will carry on scratching my brain :confused1:

  • JodieR
    JodieR Registered Posts: 1,002
    Have a read of UITF29 - I've been through it a number of times in the past few weeks & it's quite clear on what & when expenditure should be capitalised & what shouldn't, might be a good place to start!
  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Whether something is capitalised or not can depend on the business. For example the buying and selling of property is not capitalised if the property is purchased with a view to re-selling after renovation, but would be if the property is kept as an investment and sold later.
    Are these bought with a view to selling them or as a long term investment/use?
    Does that help?
  • claudialowe
    claudialowe Registered Posts: 275
    I think that I have finally sorted it out in my mind.

    The sale was for stock and the rest was for the purchase of the domain name - so goodwill really.

    It is therefore a capital gain.

    The P&L and BS look odd with it as a capital gain, but look "right" as a sale - but then it would look odd from the VATman's point of view!!!!

    Thanks for all the replies though.

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